Statecraft in Search of a Vision.

• Author: Smick, David M.

In early 1987, nine months before the stock market crashed, we began to explore the idea of this magazine. The thought was to produce a journal that would serve as a bulletin board for proposed changes to the international economic statecraft. We were newcomers to the global economic policy world that was still heavily anchored by a tight and closed relationship between the U.S. Federal Reserve System and the Bank of England.

Yet the global financial markets were changing. The floating exchange rate system, in place since the early 1970s, was under attack. A soaring dollar against the yen in response to the economic conditions of the mid-1980s (including the collapse of inflation) was threatening to bring about an international trade war. The status quo in currency affairs was unsustainable. Meanwhile, the Bank of England had become less important in a new world where Germany and Japan had emerged as economic powerhouses.

We nevertheless remained unsure about the reception a new publication would receive in this exclusive, rarified world. So we flew to Frankfurt to seek the advice of one of the major figures in European policymaking, Bundesbank President Karl Otto Pohl. Seeking out Pohl's advice made sense. He had come to central banking from the field of journalism.

As we entered his office, to our surprise the head of Europe's most powerful central bank began with one question: "Would the magazine be run from Washington, London, or New York?" He was pleased when we told him Washington, D.C. He responded: "The global financial system is too heavily influenced by the London crowd. Your publication can be helpful by bringing in new voices."

As the meeting was about to end, Pohl said that the evolving process of defining and refining a global financial "statecraft" was so important that he, as sitting president of the Bundesbank, would agree to chair our publication's editorial advisory board, assuming we were interested. We were interested.

Of course, those years represented a golden era in policy coordination and cooperation. With the Cold War raging, the free world's policy leaders were bound together not only by economics but by a common set of values that still lingered forty years after the end of World War II.

So we launched The International Economy precisely because we believed the global economic statecraft needed to evolve with the changing times. Indeed, less than a decade after our publication's launch, the Soviet Union dissolved...